Authorities tell us cash usage is dropping so might as well take it out of the system completely. BUT, if that were the case, here are the facts from the RBNZ website....Title = "Cash in hands of the public". So, why is there such a sharp increase and not a decline as you might expect?
NZ Govt trying to tell us economy in great shape and our Household wealth is increasing. Really? Again, ferreting out info from the RBNZ website and here is our net household worth (not incl r/estate)....NEGATIVE NZD$104 BILLION...or about $21,000 per person!! No point including the housing bubble real estate wealth because how many people can slice off a room to pay for day to day consumption.
Simplified explanation...
Central banks want inflation (eg - nice way to get rid of debt). Best way to get that is to increase consumption. Authorities can't force consumption if people are holding cash. Solution is to cajole population into banning cash. All money is then in the banking system in the form of electronic money and therefore can be "controlled". They introduce negative interest rates which forces people into consumption (or investment) or else they are losing purchasing power (doing that with cash in the system would incur a bank run). It is all about overall control of the financial system.
Governor Orr has already stated he would do negative rates and he has also stated people should be investing in the economy - not leaving their dosh on deposit. The current low interest rates has already got Mum & Dad investors taking financial risks they wouldn't normally take because they are looking for a bigger yield in order to fund their life!! What (or who) do you think is causing these financial bubbles?
Question for you Skol...why do you think central banks are in the middle of buying the biggest amount of gold they have ever purchased?
